Most people have been surprised by an unexpected bill before, whether it's an expensive car repair or a higher-than-expected energy bill during a hot Summer. If you haven't planned for them, these costs can easily sneak up on you and cause a financial headache.
To help you get on top of your bills, we've put together seven tips for better bill management.
1. Understand your expenses and your income
If your expenses consistently exceed your income, paying your bills in-full and on-time is likely to be a challenge.
To check your income vs. expenditure, jump onto your online banking and take a close look at what comes into your account each month after tax and super.
Next, look at your monthly expenses (using Money Smart's simple money manager might help).
If your expenses are lower than your income then paying your bills on-time should be a case of planning and using a few of our tips below. However, if you're consistently spending more than you earn, then some adjustments to reduce your spending may be necessary, to leave more room in the budget for bills.
For more help understanding your income and expenses, check out the Qudos Bank guide to budgeting.
2. Automate your payments
Paying your bills doesn't need to be a chore.
A simple approach could involve calculating the total cost of your regular monthly bills and setting up an automatic payment to transfer that amount away from your everyday account to a dedicated 'bills' bank account.
The next step would be to set up direct debits for all of your regular bills so they are deducted straight out of your new account without you having to lift a finger. By separating money for bills from your spending money, you can ensure you've always got enough to keep the lights on. If you follow this approach, you need to make sure you monitor for any increases in your regular bills are increase the amount you transfer to your 'bills' account accordingly.
3. Line up your pay and your bills
Getting the timing right between money coming in and money going out can be tricky.
For example, if your salary is paid on the last Friday of the month but the payment date on a monthly bill is the 25th, it may be feel like you are stretching out the previous month's pay to make the bill payment.
One solution can be selecting providers that allow you to choose when you pay, then lining up the bill payment days with your paydays. Many energy, internet and finance providers will allow this. For example, if you're paid on the last Friday of the month consider changing your bills so that they come out at the beginning of the next month.
4. Set reminders for the big stuff
Life happens and, every now and then, a big expense will catch you by surprise and throw a spanner in your financial works. Yearly or bi-yearly expenses like car servicing or a dental checkup are common examples of these.
To make sure you're never caught unawares, consider using a calendar or reminder app on your smartphone and pop in key recurring dates. Set reminders a month, a week and a day before you need to pay to make sure you've got time to plan for them and shift funds around if necessary.
5. Create a rainy-day fund
A rainy day fund can ensure you're in a good position to handle any bill - even the ones that sneak up on you -. Unfortunately, 40% of Australians don't have one at all, according to Finder research1.
A common 'rule of thumb' is that your rainy day fund should be able to cover your expenses and run your household for three to six months. However, it's important to always consider your own circumstances when making financial plans.
6. Consolidate your debt
If you have multiple debts with different providers, you may have several monthly repayments to remember and plan for, making them easy to miss. Consolidating your debt may be an easy way to simplify those repayments and make them easier to manage.
A debt consolidation loan rolls all your debts into one, with a single low interest rate and one simple repayment at the time of your choosing.
7. Get help with bills if you need it
Despite the best laid plans, sometimes things get on top of us all. If you are struggling to make your payments, you might consider talking to your service provider, landlord or bank right away to explain the situation. They may be able to provide you options such as:
- An instalment payment plan.
- An extension.
- A utility rebate or voucher.
Head to MoneySmart.gov.au to find out more about your options and get help with paying bills and fines2.
While paying bills may be no-ones idea of fun, it is a necessity. However, taking some time to understand your budget, automate your bills, start a rainy day fund and apply the other tips listed here can help ensure that paying bills is as straight-forward and stress-free as possible.
